Is it legal on employer’s part to hold employees salary?
I am currently associated with a small scale IT Company. Currently we are in process of regularizing our attendance and payroll cycle. Presently we are following an attendance cycle from 1st to 30th/31st of every month and salaries get credited on 1st of every month.
But now our management team is inclined to make changes in the attendance cycle from 25th to 24th of every month, stating accounts and HR could get time to process the salary inputs and then only salary can be credited on 1st of every month. But if we implement this cycle into our payroll system from next month onwards then 6/7 days salary of every existing employee will be on hold with company and can be cleared during his full and final settlement only.
Please let me know how legal this act would be, as company will take hold of employee salary for those days on which he has actually word for.

From India, Pune
Chief Of Hr, Admin & It
Talent Acquisition / Consultant - Catalis
Business Analyst

Hi Roshni,
It is a good idea by the management to change the attendance cycle, from the purview of administration.
However, just because of the technical change in payroll system the employees should not suffer. Work out a one time modification in the system (under some miscellaneous head) and pay the entire salary for the first time. This should be possible with some technical assistance. If incase this is not possible, give away the 6 days salary by way of cheque. It is not advisable to wait until the full and final settlement.

From India, New Delhi
Hi Roshni,
There are many companies who process the technical things on 25-24 cycle...
What you can do is when you implement this cycle for the first time, process for 1st to 24th of the month, pay accordingly for the 24 days...
Then you start 25-24 cycle which will work smoothly....
This way, you are holding salary till the F&F
Neither are you flawing the law which states that payment has to be done monthly at the max so you dont cross your 30 days period...
And your technicial glitch is also taken care of...
All the best, hope it helps

From India, Mumbai
Thanks Sree.
I have discussed this idea with my management team but it seems they are not willing to opt for it. I am very sure about the their exact thought process behind this but what I could sense is they want to hold the money from employees salary. They have made their mind and don't want to get convinced. Is there any compliance available under any law which may not allow employer to do this.

From India, Pune
Hi Ankita,
Thanks for your inputs.
For the first time implementation we will be following 1st to 24th Cycle but salary will be credited on 1st of the next month only though employee's 6 working days will remain unpaid. This amount will remain hold until we clear the full and final. This is where I am stuck up :-|.

From India, Pune
How come the employees 6 working days salary will be help up till the full and final settlement. In the first month you are paying for 1st to 24th and the second month you are paying from the 25th of the first month to the 24th of the second month and so on. Now if the employee leaves in between difference of working days of the last salary paid month till the last working day has to be calculated. It seems that there is some confusion built up in your mind.
From India, Ahmadabad
Dear Roshna,
This is not that difficult which you guy's are thinking.
If for salary processing your cut off date if 25-24 every month then the balance days can be shown as suppose days where you assume that for next 06 days all the employees shall be present. IF NOT than in next salary cycle you will either put his leave "CL, SL or PL whatever" or show as leave without pay and deduct. (However every employee should know that salary cycle is 25-24 every month in order to avoid any confussion) incase employee leave during that peiof you can recever that amount in F&F.

From India, Mumbai

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